TIDMRKH
RNS Number : 2786H
Rockhopper Exploration plc
16 August 2016
NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN
PART, IN OR INTO OR FROM ANY RESTRICTED JURISDICTION OR WHERE IT
WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OF ANY SUCH
JURISDICTION
16 August 2016
Rockhopper Exploration plc
("Rockhopper" or the "Company")
Completion of acquisition of production and exploration assets
in Egypt
Rockhopper Exploration plc (AIM: RKH), the oil and gas
exploration and production company with key interests in the North
Falkland Basin and the Greater Mediterranean region, is pleased to
announce that it has completed the acquisition of Beach Petroleum
(Egypt) Pty Limited ("Beach Egypt"), announced on 18 April 2016
(the "Acquisition"). Beach Egypt holds a 22% interest in the Abu
Sennan concession and a 25% interest in the El Qa'a Plain
concession.
Highlights
-- Cash consideration for the Acquisition of US$11.9 million
based on a cash effective date of 1 January 2016. No share
consideration
-- Average working interest production of approximately 1,100
barrels of oil equivalent per day (based on the 12 month period to
30 June 2016)
-- Recent activity on the Abu Sennan concession includes the
successful Al Jahraa SE-1X oil exploration well which intersected
16.4 metres of net pay
o The Al Jahraa SE-1X well has been cased and completed and is
expected to be brought onto production imminently following
signature of a new development lease
o Initial estimates are that the well would add approximately 2
mmboe to the gross 2P reserves recoverable from the Abu Sennan
concession
o In order to complete drilling and fully evaluate the results
of the Al Jahraa SE-1X well, an extension of the exploration
concession has been granted to November 2016
-- In addition, the ASH--1X ST2 side track oil development well
is currently being drilled with the aim of improving productivity
from the ASH field
-- Rockhopper management resource estimates, prior to the Al
Jahraa SE-1X well, were 4.5 mmboe (2P plus 2C), giving an implied
transaction multiple of US$2.7 per boe. Incorporating the
preliminary 2P reserve estimates for the Al Jahraa SE-1X well would
reduce the implied transaction multiple to US$2.4 per boe.
Rockhopper will undertake its own reserve evaluation, incorporating
the results of the Al Jahraa SE-1X well, following completion
-- The Acquisition, when combined with existing production in
Italy, should raise the Company's production to between 1,500 and
1,800 boepd during the remainder of 2016
The previously announced non-binding letter of intent with Dover
Petroleum Corporation ("Dover"), an affiliate of an existing
partner in Abu Sennan, for the sale by Rockhopper of a 5% interest
in Abu Sennan (the "Proposed Dover Transaction") has lapsed and as
a result Rockhopper will retain the entire 22% interest in the Abu
Sennan concession.
Separate to the Acquisition, Rockhopper is currently evaluating
potential opportunities available through the 2016 Egypt
exploration licensing round.
Sam Moody, CEO, commented:
"We are delighted to announce the completion of this
strategically important acquisition which materially increases our
exposure to low cost, cash generative production assets. Unit cash
operating costs at Abu Sennan during H1 2016 were approximately $8
per barrel.
"With the recent exploration success at the Al Jahraa SE-1X
well, combined with the increase in estimated 2P reserves, we are
delighted to be retaining the entire 22% interest in Abu
Sennan.
"In the Falklands, good progress continues to be made in
capturing costs savings and reducing the project break-even oil
price. We expect to see FEED activity ramp-up through the remainder
of 2016.
"Following completion of the Acquisition our balance sheet
remains strong and we retain our year end 2016 cash guidance of
US$60 - 70 million*."
* The year-end 2016 preliminary cash estimate is subject to the
outcome of a number of material items including exploration
drilling cost audits, disputes and insurance claims - the outcomes
of which should be known during H2 2016
Abu Sennan concession
The Abu Sennan concession is located in the Abu Gharadig basin
in the Western Desert. The concession was signed in June 2007 with
first commercial production achieved during 2012. Unit cash
operating costs were approximately US$8 per barrel during H1 2016.
The concession remains underexplored with significant exploration
and appraisal upside providing opportunities for near-term
production additions.
In July 2016, the Al Jahraa SE-1X oil exploration well, located
approximately six kilometres southeast of the Al Jahraa-1 discovery
well was drilled. The well reached total depth of 3,361 metres in
the Bahariya Formation and will shortly be brought onto production.
The well intersected 16.4 metres of net pay within the target Abu
Roash 'C', 'D' and 'E' Members with additional pay in the secondary
Upper Bahariya Formation target. Well results were above
expectations.
ASH--1X ST2 is a side-track of the ASH--1X ST1 discovery well
targeting previously encountered reservoirs in the Alam El-- Bueib
Formation in an up-dip location and aims to improve hydrocarbon
productivity from the ASH Field. Sidetracking commenced on 28 July
2016 and is expected to complete during September.
The concession partners are Kuwait Energy (50% and operator) and
Dover Investments (28%).
El Qa'a Plain concession
The El Qa'a Plain concession is located on the eastern shore of
the Gulf of Suez and contains a number of oil leads identified on
existing 2D seismic data. The concession was signed in January
2014. Approximately 470 sq km of 3D seismic plus 35 km of 2D
seismic has recently been acquired and is currently being
processed. The drilling of an exploration commitment well is
planned in 2017. The concession partners are Dana Petroleum (37.5%
and operator) and Petroceltic (37.5%).
Financial Information
The consideration for the Acquisition is US$11.9 million and was
paid in cash to Beach Energy at completion (less a deposit
previously paid to Beach Energy). The consideration was funded from
the Company's existing cash resources. Under the transaction terms,
there is no share consideration and Beach Energy retained the
economic benefit of the EGPC receivable balance as at 31 December
2015. The EGPC receivable balance as at 15 August 2016 is
approximately US$10.1 million, of which US$2.7 million is for the
benefit of Rockhopper with the balance for the benefit of Beach
Energy.
A post completion working capital adjustment will be agreed
shortly to take into account net cash flow attributable to the
assets from the cash effective date of 1 January 2016.
For further information, please contact:
Rockhopper Exploration plc
Tel: (via Vigo Communications) - 020 7830 9700
Sam Moody - Chief Executive
Fiona MacAulay - Chief Operating Officer
Stewart MacDonald - Chief Financial Officer
Canaccord Genuity Limited (NOMAD and Joint Broker)
Tel: 020 7523 8000
Henry Fitzgerald-O'Connor
Liberum Capital (Joint Broker)
Tel: 020 3100 2227
Clayton Bush
Neil Elliot
Vigo Communications
Tel: 020 7830 9700
Patrick d'Ancona
Ben Simons
Further information
This announcement is for information only and is not intended to
and does not constitute, or form part of any offer to sell or
invitation to purchase or subscribe for any securities, or any
solicitation of any vote or approval in any jurisdiction pursuant
to the Acquisition or otherwise. This announcement does not
constitute a prospectus or a prospectus equivalent document.
Note regarding Rockhopper oil and gas disclosure
This announcement has been approved by Rockhopper's geological
staff who include Fiona MacAulay (Chief Operating Officer), who is
a Fellow of the Geological Society of London and a Member of the
Petroleum Exploration Society of Great Britain and American
Association of Petroleum Geologists with over 25 years of
experience in petroleum exploration and management, and who is the
qualified person as defined in the Guidance Note for Mining, Oil
and Gas Companies issued by the London Stock Exchange in respect of
AIM companies. In compiling its resource estimates, Rockhopper has
used the definitions and guidelines as set forth in the 2007
Petroleum Resources Management System approved by the Society of
Petroleum Engineers.
Glossary
2C best estimate of contingent resources
2P proven plus probable
boe barrels of oil equivalent
boepd barrels of oil equivalent per day
mmboe million barrels of oil equivalent
net pay the portion of reservoir containing
hydrocarbons that through the placing
of cut offs for certain properties
such as porosity, water saturation
and volume of shale determine the
productive element of the reservoir
The information contained within this announcement is deemed by
the Company to constitute inside information as stipulated under
the Market Abuse Regulations (EU) No. 596/2014 ("MAR").
This information is provided by RNS
The company news service from the London Stock Exchange
END
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